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Statutory reserves

What is a statutory reserve and why cannot we create statutory reserves when two companies are amalgamated?


Rithani R.C

Rithani R.C

CA Inter

2K+

01-Apr-21 17:29

27

Answers (3)

Best Answer

Statutory Reserve is the amount of money, securities, or assets that need to be set aside as a legal requirement by insurance companies and financial institutions to cover its claims or obligations which are due in the near future. Your second doubt can you elaborate?


ruchi lahoti

ruchi lahoti

Moderator

02-Apr-21 11:45

Thank you so much !! My 2nd doubt is if two companies merge together why is it necessary to create statutory reserve?

Amalgamation adjustment reserve is debited to bring in the statutory reserves of the transferor company. There is no creation of statutory reserves, it is transferred as per the rule


ruchi lahoti

ruchi lahoti

Moderator

03-Apr-21 12:44

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